IKEA uk announces financial year 2011 results

IKEA uk announces financial year 2011 results

Strengthening its position as leader of the home furnishings market has been achieved despite a 3% decrease in like-for-like sales.

The product area with the most significant upwards shift was Kitchens with like-for-like sales up by 6%. This can be attributed to the growing customer uptake of the kitchens service package that was launched in 2010, as well as the re-design of its kitchen showrooms to make them relevant to how people live in local areas around its stores. A focus was also placed on further developing employees’ competence. The company has now seen two years of double digit growth in this area and has further increased market share by +1.2 points to 8.5%**.

More options for customers

Despite the past year’s tough trading climate, IKEA UK has continued to make significant investments to improve customers’ shopping experience, with highlights including:

•New lower product prices: prices lowered by 5% across the home furnishings range compared to the previous year

•£31.8 million spent on improving the in-store shopping environment enabling the company to plan for the long-term: a total of £24 million was invested in Bedrooms. This included a £15 million investment to reduce the cost of the PAX wardrobe range, and a £2.5 million investment to redesign stores’ bedroom departments based on people’s lives at home following in depth research around each store’s local area. As a result, the company has already seen a 12% growth in this business area

•Shop Online: adding 800 more products for customers to buy online. Sales grew by over 25%

•A new in-store picking service: for customers visiting a store who want furniture items to be picked from the shelves for them, at a cost of £15

•A new and improved delivery service: enabling the majority of customers to take advantage of a new lower delivery costs, starting from £15, based on the value of goods purchased. This has resulted in a 60% increase in uptake of this service to date

•Furniture take-back scheme: customers purchasing a new bed, mattress, sofa or appliance can pay a £15 non-profit fee for IKEA to take away their old one when delivering their new one. To do this, IKEA UK partnered with a number of charity organisations through the Furniture Recycling Network (FRN)

A sustainable ambition

IKEA UK invested almost £4 million to help create more renewable energy for its operations including the purchase of a wind farm in North Scotland, as well as the installation and operation of rooftop solar photovoltaic networks. Total waste recycled increased by 5% to 85%, and for the first time ever, at no cost to the business, compared to 2003 when costs peaked at £893,000. Over the course of financial year 2011, waste recycling generated the company a revenue of £109,000 due to the amount of plastic and cardboard that was sold to corporate partners for reprocessing, and the creation of new packaging materials and products.

Commenting on the Company’s performance during financial year 2011, Martin Hansson, IKEA UK’s Country Manager said: “Low consumer confidence, coupled with the stagnant housing market has resulted in another tough year for us. Despite this, we remained focused on giving our customers the best value for money home furnishings, which I believe has helped us strengthen our market leader position.

“Looking ahead, we are confident that our commitment to price, quality and improving our services will enable us to strengthen our market position over the coming year. We also expect our newly launched service initiatives to deliver a strong return on investment, in fact we are already seeing a 60% increase in take up of our lower priced delivery service to date.

“We will show our customers even more inspiration and many new products when they visit our stores and our website. Additionally, through on-going research and home visits, we will continue to understand how people live at home, and show our customers relevant solutions that are tailored to suit them.

“Over the next year, we will invest £26.6 million to make more improvements to our in-store shopping environment. Plus we intend to make it even easier for customers to shop online by adding a further 1,500 more products, improving our delivery lead times, and introducing new functions such as the launch of mobile optimised sites and additional mobile apps.

“We also see an opportunity to prove to more people that we have the best price on the market, and promise to carry on lowering our prices. On top of this, we have lots more new initiatives in the pipeline to improve our shopping experience and show customers that their needs are our number one priority. In 2012 we will be celebrating 25 years in the UK and look forward to celebrating with our customers.”

*The fiscal year for IKEA UK is 1st September 2010 – 31st August 2011. The IKEA Group operates 280 IKEA stores in 26 countries. In addition there are 34 IKEA stores that are owned and run by franchisees by the IKEA Group in 16 countries/ territories.